Thai True buys Hutchison units to advance 3G plans

• True to give 6.3 bln baht loan to Hutchison network company
• Deal valued at 4.35 mln baht, excluding loan
• CDMA clients to be migrated to HSPA in two years
• Shares rise then fall, after recent strong gain (Adds comments, debt detail)

By Khettiya Jittapong and Manunphattr Dhanananphorn

BANGKOK (Reuters) - Thailand’s True Corporation Pcl <TRUE.BK> said on Thursday it was buying the local CDMA mobile phone business of Hutchison Telecommunications International Ltd <0215.HK> along with related companies.

The purchase will enable True to speed up the rollout of lucrative, long-delayed 3G data services in Thailand, where it is the only integrated telecoms service provider, offering fixed and mobile phone, Internet and cable television services.

True Corp shares initially rose on the news then fell. By the midday break, they were down 0.7 percent at 7.15 baht, having touched 7.30 baht. The main index <.SETI> was up 0.07 percent.

True shares have risen more than 40 percent in the past three months on speculation about the CDMA acquisition, which would give True the right to use the CDMA frequency and enable it to become the only nationwide 3G service provider in Thailand.

“The deal should make True Move’s business outlook clearer and improve revenue growth and the cash flow outlook,” Kim Eng Securities said in a KELIVE Research note. Unlisted True Move, part of True Corp, operates Thailand’s third-largest mobile network. Its existing 2G concession expires in 2013 and auctions for 3G licences for a new 2.1 GHz spectrum have been repeatedly delayed.

Under the deal, its Real Move unit will buy 92.5 percent of Hutchison Wireless Multimedia Holdings Ltd for 4.35 million baht ($144,300), True said in a statement to the stock exchange.

Real Move and another unit, Real Future, will acquire another three companies related to the CDMA business, including network provider BFKT, for 1 baht each.

Hutchison-CAT Wireless Multimedia Co, a joint venture between Hutchison and state-owned telecoms firm CAT Telecom Pcl, operates a CDMA (code division multiple access) mobile network that has a small market share in Thailand.

The service covers 25 central provinces in Thailand over a network leased from BFKT, a subsidiary of Hutchison Telecom.

True said the purchases of the four companies would give it a holding in BFKT subsidiaries.

After the acquisition, BFKT would continue to lease a network and provide maintenance services to CAT Telecom, which would focus on providing nationwide 3G services on a super high-speed packet access (HSPA) technology, it said.

Real Move would be a reseller of services and capacity on the network that it would buy from CAT, and planned to migrate CDMA clients to HSPA within two years, the statement said.

After the purchases, Real Future would give BFKT a loan of up to 6.3 billion baht ($209 million) to repay debt, using funds from a bank loan, True said.

On Wednesday, CAT Chief Executive Jurayut Rungsrithong said he expected CAT and True to jointly launch 3G service in January, earlier than state-owned TOT Pcl, which plans a service in April.

CAT has said True Move’s contract could be extended to 2025 if the mobile operator succeeded in buying the CDMA business, which has 14 years remaining on its contract.

Market leader Advanced Info Service Pcl (AIS) <ADVA.BK> has launched a 3G service on its 900MHz frequency with limited coverage, while number two Total Access Communication Pcl (TAC) <DTAC.BK> has got approval from CAT to expand a 3G trial service.

Hutchison’s CDMA service has less than 2 percent of the Thai mobile market. The top three operators — AIS, TAC <TACC.SI> and True Move — have a combined share of about 98 percent. ($1=30.14 Baht)